Iran Using Chinese Bank to Bypass Sanctions

New intelligence report reveals Iran has been using a Chinese bank to transfer funds to companies linked with its elite Quds Force.

Ben Ariel, 19/11/14 03:16

Members of Iran's Revolutionary Guard (IRGC)

Reuters

Iran has been using a Chinese bank to transfer funds to companies linked with its army, according to a Western intelligence report reviewed by the Reuters news agency.

The report says that a company by the name of Shenzhen Lanhao is one of several companies in China that receives money from Iran through a Chinese bank. Such transfers help to finance international operations of the Islamic Revolutionary Guards Corps' elite Quds Force.

Quds Force provides arms, aid and training for pro-Iranian groups in the Middle East, such as Hezbollah, Hamas and Shiite Muslim militias in Iraq.

They have also armed and trained government forces in Syria's civil war in violation of a UN arms embargo, U.S. and European officials say.

Washington designated the Quds a supporter of terrorism in 2007. The European Union sanctioned them in 2011.

The report seen by Reuters said that the Central Bank of Iran (CBI) holds accounts with the Bank of Kunlun Co. Ltd., a China National Petroleum Corp unit.

Quds-controlled Iranian companies, including one called Bamdad Capital Development Co., initiate transfers from these accounts to either Chinese entities directly controlled by the Quds or to Chinese entities owed money by the Quds, such as Shenzhen Lanhao.

"The money transfers from accounts held by the CBI with Bank Kunlun are initiated by the Quds Force and transferred to Chinese companies connected to the Quds Force in order to meet its financial needs," the seven-page report said.

Reuters could not independently verify the claims in the report.

The suspected movement of Iranian funds linked to the Quds Force through a Chinese bank and Chinese companies is a reminder of the difficulty of enforcing sanctions on Iran at a time when the United States and other world powers hope to clinch a nuclear deal with Tehran by November 24, noted the news agency.

The U.S. Treasury sanctioned Kunlun in 2012 for conducting business with Iran and transferring money to an entity linked to Iran's Revolutionary Guards, but there was no mention then of any link to the Quds.

Once the money is transferred from Kunlun to other entities, the intelligence report said, Quds can use it for acquisitions in China and to finance covert activity in other countries.

The report does not say how specific funds moving out of the CBI's accounts at Kunlun would be used by the Quds.

The report does not suggest that either the Chinese government or Bank of Kunlun were aware of the possibility that there could be a Quds Force connection to Kunlun's transactions.

The latest report is the latest indicator that Iran has been bypassing Western sanctions. A UN report released in May highlights Iran's methods of evading the sanctions that were imposed on it.

The report showed shows that these methods range from concealing titanium tubes inside steel pipes to using its petrochemical industry as a cover to obtain items for a heavy-water nuclear reactor.